Tens of thousands of San Diego County homeowners continue to owe more on their properties than they are worth, despite the run-up in prices that has taken place over the last two years.

In the second quarter of this year, there were 46,585 county homeowners underwater on their homes, real-estate tracker Zillow reported this week. Those with negative equity make up about 10 percent of property owners in the county who have a mortgage, down from 21 percent in the second quarter of last year.

The homeowners were underwater despite an increase in the county’s median home price of more than $100,000 over the last two years.

“There were a lot of people that got caught at the top (of the housing bubble),” said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. “During the run-up, people were just out at a frenetic frenzy in 2006 and 2007. They didn’t care what price they paid for property.”

Negative equity in the county peaked at 35.6 percent of homeowners in the first quarter of 2012, but it appears those remaining underwater bought in areas with new construction completed just before the housing crash. Most of the negative equity in the county is in Chula Vista, Oceanside, San Marcos, Spring Valley and El Cajon.

As a whole, San Diegans who are underwater collectively owe $6.14 billion. That amount, however, should continue to decrease as San Diego home values rise, and people regain equity in their properties.

For example, in June, the median sale price in the county was $450,000, up 8 percent from June 2013, and 34 percent from the median in June 2012. Still, that’s a long way from the peak median of $517,500 in November 2005, according to CoreLogic DataQuick.

Zillow predicted that by the second quarter of next year, the percentage of homeowners underwater will decline to 7.6 percent in San Diego County.

“We knew it was going to take a long time to correct,” Goldman said. “There’s always going to be properties that are upside down. Is this more than normal? Yes, but we’re returning to a more stable market, and there will be people who just simply have paid too much for their property.”

Christopher Thornberg, founder of Beacon Economics of Los Angeles, said the move-up market will get a drastically needed boost as people regain equity in their homes.

“More of that equity means that people are going to have better access to capital, they’re going to have more money to put down on other properties,” he said. “The move-up buyer is the kind of buyer that drives new home construction.”

Nationwide, 17 percent of homeowners, or 8.7 million, were underwater in this year’s second quarter. Of the nation’s 35 largest metropolitan areas, San Jose had the lowest percentage of property owners underwater on their homes, with 4.6 percent, while Atlanta had the highest at 28.9 percent.

Mortgage applications increased 2.8% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 22, 2014.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2% compared with the previous week.

“Buyers made a late summer push, in this season that never reached its full potential. More homeowners also refinance last week, taking advantage of these historically low rates that won’t be around forever,” said Quicken Loans vice president Bill Banfield. “Nearly a million more homeowners can still benefit of the HARP program, but their opportunity will be fleeting when rates start rising.”

The Refinance Index increased 3% from the previous week. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 11% lower than the same week one year ago.

The refinance share of mortgage activity increased to 56% of total applications, the highest level since March 2014, from 55% the previous week. The adjustable-rate mortgage share of activity remained unchanged at 8.0% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.28% from 4.29%, with points decreasing to 0.25 from 0.26 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.22% from 4.18%, with points increasing to 0.28 from 0.23 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.98%, the lowest since June 2013, from 3.99%, with points increasing to 0.13 from 0.03 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.47% from 3.44%, with points increasing to 0.34 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

Continuing the long-term trend this year, mortgage applications decreased 2.2% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 25, 2014.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2% compared with the previous week.

“Despite mortgage backed security issuance being up 38 percent from the first quarter average, the MBA index continues to show declines. This suggests that there are fundamental shifts occurring in the market where big players (reporting to the MBA) may be giving up market share or perhaps not holding as many loans in portfolio, thereby pushing up the bond issuance,” said Quicken Loans Vice President Bill Banfield. “In either case, the current level of activity for purchases and refinances has been directional stronger in recent months based on actual security issuance. With home prices stabilizing from a rapid level of appreciation and interest rates either falling or holding steady recently, I expect to see continued improvements in the purchase arena.”

The Refinance Index decreased 4% from the previous week. The seasonally adjusted Purchase Index increased 0.2% from one week earlier.

The unadjusted Purchase Index increased 1% compared with the previous week and was 12% lower than the same week one year ago.

The refinance share of mortgage activity decreased to 53% of total applications from 54% the previous week. The adjustable-rate mortgage share of activity remained unchanged at 8% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.33%, with points increasing to 0.24 from 0.23 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.22% from 4.21%, with points increasing to 0.23 from 0.20 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4.03%, with points decreasing to 0.00 from 0.15 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.47%, with points decreasing to 0.25 from 0.28 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs increased to 3.31% from 3.21%, with points increasing to 0.40 from 0.32 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

With year-over-year price increases continuing on a double-digit course despite recent slowdowns, the ever-present question has once again come to the fore for market commentators and analysts: Has the housing market reached bubble status once again?

The answer—at least, according to Trulia chief economist Jed Kolko—is both yes and no.

In the company’s latest quarterly Bubble Watch report, Kolko estimates national home prices are still around 5 percent undervalued when examining long-term fundamentals like historical prices, incomes, and rents. While ongoing improvements in prices have brought the market close to a tipping point, he notes that it’s far cry from the 39 percent overvaluation in the first quarter of 2006.

“Even though recent double-digit price gains look unsustainable, current national price levels are not cause for alarm,” Kolko said in a blog post. “Sharp price gains, like we’ve had in 2012 and 2013, are not the sign of a bubble unless price levels look high relative to fundamentals.”

Furthermore, “the slowdown in price gains make[s] it less likely that we’re heading for another bubble,” he added.

While the national market is still undervalued, conditions vary widely at the local level. According to Trulia, out of the 100 largest metro markets, home prices are overvalued in 19, including eight of the 11 largest California metros. The greatest danger is along the state’s southern coast, in markets like Orange County, Los Angeles, and Riverside-San Bernardino—which make up three of the five most overvalued markets in the country. (The two remaining slots go to Honolulu and Austin.)

While the number of overvalued housing markets is on the rise, Kolko again says historical perspective is needed: “In 2014 Q1, prices were overvalued in 19 of the 100 largest metros, which is the highest number since 2009 Q4; furthermore, prices were overvalued by more than 10 percent in 4 large metros, which is the highest number since 2008 Q4.

However, at the height of the bubble, all 100 were overvalued, and 91 were overvalued by more than 10 percent.”

Consumers apparently haven’t gotten the memo that mortgage standards are tightening, if responses toFannie Mae’s January National Housing Survey are any indication.

Fifty-two percent of respondents in the company’s latest survey said they think it would be easy to get a mortgage today, reflecting a climb of 2 percentage points. The number of consumers saying it would be difficult to obtain a loan fell 3 points, meanwhile, dropping to 45 percent.

“For the first time in the National Housing Survey’s three-and-a-half-year history, the share of respondents who said it is easy to get a mortgage surpassed the 50-percent mark,” said Doug Duncan, SVP and chief economist at Fannie Mae. “The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month’s increase in consumers’ intention to buy rather than rent their next home.”

The share of consumers who said they would buy if they moved climbed to an all-time survey high of 70 percent, while the share of those who would rent declined to an all-time low of 26 percent.

Respondents also seem reluctant to accept projections of rising mortgage rates over the year, with the share of those expecting increases dropping for the second straight month to 55 percent. Five percent said they expect rates to drop, up slightly from the December survey.

On the other hand, it appears more people have taken notice of reports of slowing home price gains. The share of consumers expecting home prices to increase in the next year fell 6 percentage points to 43 percent, while the share expecting prices to stay the same increased 7 percentage points to 45 percent.

The average 12-month home price change expectation was 2.0 percent, a dramatic decline from December’s prediction of 3.2 percent.

Duncan said that while the dip in price expectations was notable, it is “consistent with our view of moderating home price gains this year from a robust pace last year.”

Consumer attitudes about the economy also improved last month, even with disappointing employment data hanging over the country’s collective head. The share of consumers who believe the economy is on the right track climbed 8 percent points to 39 percent, while the share who said it’s on the wrong track fell to 54 percent.

Asked about their own personal financial situation, 44 percent of consumers expect things to improve (up from 42 percent in December), while only 14 percent said they’ll be worse off.

Following a year of fast-paced appreciation, Fitch Ratings expects home price gains to slow to a more moderate pace in 2014 in the United States, according to its Global Housing and Mortgage Outlook released Tuesday. The ratings agency also predicts mortgage volume will decline and delinquencies and shadow inventory will decrease, albeit slowly, while liquidation timelines continue to rise.

Home prices will continue to rise on the winds of “market momentum, the effects of inflation, the improving economy, and a return of buyers attracted by signs of stabilization,” according to Fitch.

However, rising mortgage rates and increasing inventory will temper price gains this year, the ratings agency said in its report.

At a national level, prices are about 15 percent overvalued, according to Fitch. A few markets in western states are leading this trend with home price growth outpacing income and other economic factors. For example, price-to-rent and price-to-income ratios in San Francisco have risen almost 25 percent since early 2012, Fitch explained.

Because of these trends, “Fitch remains concerned about regional overvaluation,” the ratings agency stated in its report.

While affordability remains high overall, Fitch says affordability will slip somewhat this year. One contributing factor is rising mortgage rates, which will likely reach 5 percent in 2014, according to Fitch’s predictions. The ratings agency says rising interest rates will also contribute to “a substantial decrease” in lending this year.

Prepayments will “remain at lower levels than historical averages for the next several years” as interest rates rise and refinances become less favorable, according to the ratings agency.

On the other hand, purchase loans will grow over the next few years, Fitch said, adding that the government will “continue to dominate market issuance through Fannie Mae and Freddie Mac.”

Although “a return to historic levels of arrears is not expected in the near future,” Fitch noted that recently-originated loans are performing strongly.

Long liquidation timelines, especially in judicial states, mean today’s shadow inventory will be slow to dissipate. While the industry’s shadow inventory will continue its current pace of decline for several years, Fitch says it will take about five years to work through the current volume of homes that make up the shadow inventory.

Housing starts have begun to pick up, and Fitch expects them to continue to rise, but they will be vulnerable to price corrections.

While U.S. prices will continue to rise this year, Fitch expects home prices in its northern neighbor to remain flat or fall slightly. This is due to Canada’s “cautious lending policies driven by government measures,” the ratings agency explained.

For FHA loans endorsed prior to June 3, 2013, the MIP cancellation terms are as follows:

30-year loan term : Annual MIP is automatically canceled once the loan reaches 78% loan-to-value and annual MIP has been paid for at least 60 months.

15-year loan term : Annual MIP is automatically canceled once the loan reaches 78% loan-to-value. There is no requirement for MIP to be paid for at least 60 months.

Note that the loan-to-value calculation is not based on the current appraised value of the home; it’s based on the FHA’s last known value of the home. In many situations, the last known value is the home’s purchase price.

Using these rules, homeowners with a 30-year fixed rate FHA mortgage must pay mortgage insurance for at least five years before it can go away. Homeowners with a 15-year fixed-rate FHA mortgage can have MIP removed as soon as LTV drops to 78%.